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Long-Run Productivity Shifts and Cyclical Fluctuations

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  • Silvia Sgherri

Abstract

Using unobserved stochastic components and Kalman filter techniques, the paper assesses the relative importance of transitory and permanent shifts in Italian real GDP within a production function framework. Evidence suggests that the increase in hours worked that has accompanied pension and labor market reforms accounts for the bulk of low-frequency variation in growth, but points to factor utilization as the main driver of business cycle fluctuations. In contrast with the predictions of standard Real Business Cycle models, a positive shock to the underlying rate of total factor productivity growth generates a slight decline in hours, whereas the response of output to the same shock is found to be positive.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/228.

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Length: 37
Date of creation: 01 Dec 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/228

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Keywords: Economic models; business cycle; employment; unemployment; growth accounting; business cycle fluctuations; unemployment rate; nairu; gdp growth; labor participation; business cycles; growth rate; real gdp; real business cycle; employment growth; total factor productivity; growth rates; rate of unemployment; employment rates; employment indicators; private employment; employment rate; gdp growth rate; female labor force; employment fluctuations; real business cycles; male labor force; private employment agencies; labor force participation; self employment; economic growth; labor force population; total employment; aggregate employment; employment agencies; source of business cycles;

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Cited by:
  1. Calcagnini, Giorgio & Travaglini, Giuseppe, 2014. "A time series analysis of labor productivity. Italy versus the European countries and the U.S," Economic Modelling, Elsevier, vol. 36(C), pages 622-628.
  2. Cesaroni, Tatiana & Pappalardo, Carmine, 2008. "Long Run and Short Run Dynamics in Italian Manufacturing Labour Productivity," CEPR Discussion Papers 6795, C.E.P.R. Discussion Papers.
  3. Bogdan Lissovolik, 2008. "Trends in Italy’s Nonprice Competitiveness," IMF Working Papers 08/124, International Monetary Fund.

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